4) For Sustained High Economic Growth in Asia
2010 Jul/Aug
COVER STORY: White Paper on International Economy & Trade 2010
By Shujiro URATA (Prof. of economics, Graduate School of Asia-Pacific Studies, Waseda Univ.)
Secret behind Fast Economic Growth in Asia Since the end of World War II, the East Asian region has sustained high economic growth over 60 years, with its leading player changing in succession from Japan to the newly industrializing economies (NIEs) of South Korea, Taiwan, Hong Kong and Singapore, and to such member states of the Association of Southeast Asian Nations (ASEAN) as Indonesia, Malaysia and Thailand. Currently, China is the driving force. The region's growth was temporarily dented by the 1997-1998 Asian currency crisis and the 2008-2009 global financial meltdown. Except these periods, however, the regional economy has been growing remarkably. Factors behind the solid growth in East Asia include effective economic policy measures conducive to maintaining a stable macroeconomic environment; active investment made on the back of swelling savings; and diligent and competent labor forces. Particularly significant was the rapid expansion of trade and foreign direct investment (FDI). This article is intended to clarify trade and investment mechanisms that have brought about the rapid economic growth in East Asia in recent years. It will also seek to figure out problems associated with further expansion of trade and investment, which are considered to play pivotal roles in further growth, and look into ways to find solutions to them. Growth Led by Trade/Investment Interdependence East Asian economies have grown under the lead of such international economic activities as trade and FDI. This can be confirmed if you trace the trends of gross domestic product (GDP), the benchmark for domestic economic activity, and international economic activity. From 1980 to 2008, East Asia's GDP attained a 6.7-fold expansion. Exports from, and FDI into, the region grew even more strongly during that period, showing 13.3-fold and 59.6-fold surges, respectively. Exports enabled East Asian economies to import intermediate and capital goods that are vital for economic growth. Meanwhile, FDI spurred capital and technology transfers, thus greatly contributing to their growth. Further, FDI in the region by multinational corporations (MNCs) enabled FDI recipient countries to cash in on the MNCs' networks for procuring parts and marketing products, resulting in more efficient production and greater sales in these countries. One of the main reasons for the expanded trade and FDI lies in the liberalization of trade and FDI. East Asian countries pushed... <<BACK

The whole story is only available to the subscribers.
Please login to access the site

	Log In:

ID/E-mail:
Password:


Forgot your Password?>>